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Definition of Policy
A written document that serves as evidence of insurance coverage and contains pertinent information about the benefits, coverage and owner, as well as its associated directives and obligations.
A monetary policy of matching wage and price increases with money supply increases so that the real money supply does not fall and push the economy into recession.
A policy designed to increase an economy's prosperity at the expense of another country's prosperity.
Decreasing inflation by immediately decreasing the money growth rate to a new, low rate. Contrast with gradualism.
Procedures followed by a firm in attempting to collect accounts receivables.
Procedures to collect and monitor receivables.
Standards set to determine the amount and nature of credit to extend to customers.
A company’s stated goal for how soon a customer order will be
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
A policy that is a conscious, considered response to each situation as it arises. Contrast with policy rule.
An established guide for the firm to determine the amount of money it will pay as dividends.
This policy governs Canada Life's actions regarding distribution of dividends to policyholders. It's goal is to achieve a dividend distribution that is equitable and timely, and which gives full recognition of the need to ensure the ongoing solidity of the company. It also specifies that distribution to individual policyholders must be equitable between dividend classes and policyholder generations, and among policyholders within any class.
The use of government spending and taxing for the specific purpose of stabilizing the economy.
A change in government spending or taxing, designed to influence economic activity.
A policy designed to lower inflation without reducing aggregate demand. Wage/price controls are an example.
A policy under which the insurance company promises to pay a benefit of the person who is insured.
Joint Policy Life
One insurance policy that covers two lives, and generally provides for payment at the time of the first insured's death. It could also be structured to pay on second death basis for estate planning purposes.
A course of action adopted by a financial institution to guide and usually determine present and future decisions in the light of given conditions.
Actions taken by the Board of Governors of the Federal Reserve System to influence the
Actions taken by the central bank to change the supply of money and the interest rate and thereby affect economic activity.
A type of insurance policy or annuity in which the owner does not receive dividends.
A policy offers the potential of sharing in the success of an insurance company through the receipt of dividends.
Perfect market view (of dividend policy)
Analysis of a decision on dividend policy, in a perfect capital
Policy Acquisition Costs
Costs incurred by insurance companies in signing new policies, including expenditures on commissions and other selling expenses, promotion expenses, premium
Yearly event linked to a policy. Usually the date issued.
Policy asset allocation
A long-term asset allocation method, in which the investor seeks to assess an
Date on which the insurance company assumes responsibilities for the obligations outlined in a policy.
This is an administrative fee which is part of most life insurance policies. It ranges from about $40 to as much as $100 per year per policy. It is not a separate fee. It is incorporated in the regular monthly, quarterly, semi-annual or annual payment that you make for your policy. Knowing about this hidden fee is important because some insurance companies offer a policy fee discount on additional policies purchased under certain conditions. Sometimes they reduce the policy fee or waive it altogether on one or more additional policies purchased at the same time and billed to the same address. The rules are slightly different depending on the insurance company. There could be enormous savings if several people in the same family or business were intending to purchase coverage at the same time.
Administrative charge included in a policy Premium.
Theory that anticipated policy has no effect on output.
A formula for determining policy. Contrast with discretionary policy.
Period between two policy anniversaries.
This is the person who owns a life insurance policy. This is usually the insured person, but it may also be a relative of the insured, a partnership or a corporation. There are instances in marriage breakup (or relationship breakup with dependent children) where appropriate life insurance on the support provider, owned and paid for by the ex-spouse receiving the support is an acceptable method of ensuring future security.
The person who owns and holds all rights under the policy, including the power to name and change beneficiaries, make a policy loan, assign the policy to a financial institution as collateral for a loan, withdraw funds or surrender the policy.
Signaling view (on dividend policy)
The argument that dividend changes are important signals to investors
Tax differential view ( of dividend policy)
The view that shareholders prefer capital gains over dividends,
Tax-Related Incomes Policy (TIP)
Tax incentives for labor and business to induce them to conform to wage/price guidelines.
Traditional view (of dividend policy)
An argument that "within reason," investors prefer large dividends to
Variable life insurance policy
A whole life insurance policy that provides a death benefit dependent on the
The sum of all the interest options in your policy, including interest.
Yearly amount payable by a client for a policy or component.
A regular periodic payment made by an insurance company to a policyholder for a specified period
A contract which provides an income for a specified period of time, such as a certain number of years or for life. An annuity is like a life insurance policy in reverse. The purchaser gives the life insurance company a lump sum of money and the life insurance company pays the purchaser a regular income, usually monthly.
Periodic payments made to an individual under the terms of the policy.
The party applying for an insurance policy.
A signed statement of facts made by a person applying for life insurance and then used by the insurance company to decide whether or not to issue a policy. The application becomes part of the insurance contract when the policy is issued.
This is the legal transfer on one person's interest in an insurance policy to another person or entity, such as to a bank to qualify for a loan
Assuris is a not for profit organization that protects Canadian policyholders in the event that their life insurance company should become insolvent. Their role is to protect policyholders by minimizing loss of benefits and ensuring a quick transfer of their policies to a solvent company where their benefits will continue to be honoured. Assuris is funded by the life insurance industry and endorsed by government. If you are a Canadian citizen or resident, and you purchased a product from a member life insurance company in Canada, you are protected by Assuris.
Back To Back Annuity
This term refers to the simultaneous issue of a life annuity with a non-guaranteed period and a guaranteed life insurance policy [usually whole life or term to 100]. The face value of the life insurance would be the same amount that was used to purchase the annuity. This combination of life annuity providing the highest payout of all types of annuities, along with a guaranteed life insurance policy allowed an uninsurable person to convert his/her RRSP into the best choice of annuity and guarantee that upon his/her death, the full value of the annuity would be paid tax free through the life insurance policy to his family members. However, in the early 1990's, the Federal tax authorities put a stop to the issuing of standard life rates to rated or uninsurable applicants. Insuring a life annuity in this manner is still an excellent way to provide guaranteed tax free funds to family members but the application for the annuity and the application for the life insurance are separate transactions and today, most likely conducted through two different insurance companies so that there is no suspicion of preferential treatment given to the life insurance application.
A procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age of the consumer at policy issue lower than it actually was in order to get a lower premium.
An international trade policy of competitive devaluations and increased protective
This is the person who benefits from the terms of a trust, a will, an RRSP, a RRIF, a LIF, an annuity or a life insurance policy. In relation to RRSP's, RRIF's, LIF's, Annuities and of course life insurance, if the beneficiary is a spouse, parent, offspring or grand-child, they are considered to be a preferred beneficiary. If the insured has named a preferred beneficiary, the death benefit is invariably protected from creditors. There have been some court challenges of this right of protection but so far they have been unsuccessful. See "Creditor Protection" below. A beneficiary under the age of 18 must be represented by an individual guardian over the age of 18 or a public official who represents minors generally. A policy owner may, in the designation of a beneficiary, appoint someone to act as trustee for a minor. Death benefits are not subject to income taxes. If you make your beneficiary your estate, the death benefit will be included in your assets for probate. Probate filing fees are currently $14 per thousand of estate value in British Columbia and $15 per thousand of estate value in Ontario.
A system that monitors and evaluates the performance of a fixed-income portfolio , as well as the
An amount the insurance company will pay if the policyholder ends a whole life
Cash Surrender Value
This is the amount available to the owner of a life insurance policy upon voluntary termination of the policy before it becomes payable by the death of the life insured. This does not apply to term insurance but only to those policies which have reduced paid up values and cash surrender values. A cash surrender in lieu of death benefit usually has tax implications.
Cash Surrender Value
Benefit that entitles a policy owner to an amount of money upon cancellation of a policy.
Change in Accounting Estimate
A change in the implementation of an existing accounting
Request for payment of benefits under the terms of an insurance policy.
Person or party making request for payment of benefits under the terms of an insurance policy.
The grouping of investors who have a preference that the firm follow a particular financing
In medical insurance, the insured person and the insurer sometimes share the cost of services under a policy in a specified ratio, for example 80% by the insurer and 20% by the insured. By this means, the cost of coverage to the insured is reduced.
This is the person designated to receive the death benefit of a life insurance policy if the primary beneficiary dies before the life insured. This is a consideration when husband and wife make each other the beneficiary of their coverage. Should they both die in the same car accident or plane crash, the death benefits would go to each others estate and creditor claims could be made against them. Particularly if minor children could be survivors, then a trustee contingent beneficiary should be named.
This is the person designated to become the new owner of a life insurance policy if the original owner dies before the life insured.
The act of changing from one type of life insurance policy to another, without having to give evidence of insurability.
Term life insurance products are offered as non-convertible or convertible to a certain time in the future. The coversion right has a time limit, usually to the policy holder's age 60 or possibly even age 70. This right means that the policy holder has the right to convert their existing policy to another specific different plan of permanent insurance within the specified time period, without providing evidence of insurability. There is a slightly higher cost for a term policy with the conversion priviledge but it is a valuable feature should a policy holder's health change for the worst and continued insurance coverage becomes a necessity.
The calculation and comparison of the costs and benefits of a policy or project.
Cost of Insurance
The cost of insuring a particular individual under the policy. It is based on the amount of coverage, as well as the underwriting class, age, sex and tobacco consumption of that individual.
Falling during expansions and rising during recessions. A countercyclical policy stimulates during a recession and contracts during an expansion.
The interest rate offered on an investment type insurance policy.
Decreases in aggregate demand which accompany an expansionary fiscal policy, dampening the impact of that policy.
A flat amount that an insured must pay before the insurance company makes any benefit payments under a health insurance policy.
As the term dividend relates to a corporation's earnings, a dividend is an amount paid per share from a corporation's after tax profits. Depending on the type of share, it may or may not have the right to earn any dividends and corporations may reduce or even suspend dividend payments if they are not doing well. Some dividends are paid in the form of additional shares of the corporation. Dividends paid by Canadian corporations qualify for the dividend tax credit and are taxed at lower rates than other income.
Unlike dividends which are paid to company shareholders, participating insurance policy dividends are not based on the company's overall profits. Rather, they are determined by grouping policies by type and country of issue and looking at how each class contributes to the company's earnings and surplus.
A group of shareholders who prefer that the firm follow a particular dividend policy. For
The time it takes for a policy or annuity to reach maturity.
Life insurance payable to the policyholder, if living on the maturity date stated in the policy, or to a beneficiary if the insured dies before that date. For example, some Term to age 100 policies offer the option of taking the face amount of the policy as a cash payout at age 100 if the policyholder is still alive and paying all required income taxes on the amount received or leaving the policy to pay out upon death whereupon the payout is tax free.
A specific condition or circumstance listed in the policy that are not covered by the policy
Federal Reserve System
The central bank of the U.S., established in 1913, and governed by the Federal
Federal Reserve System
The central banking authority responsible for monetary policy in the United States.
Financial leverage clientele
A group of investors who have a preference for investing in firms that adhere to
An attempt to maintain the economy at or near full employment by frequent changes in policy.
First To Die Coverage
This means that there are two or more life insured on the same policy but the death benefit is paid out on the first death only. If two or more persons at the same address are purchasing life insurance at the same time, it is wise to compare the cost of this kind of coverage with individual policies having a multiple policy discount.
A specific period of time after a premium payment is due during which the policy owner may make a payment, and during which, the protection of the policy continues. The grace period usually ends in 30 days.
A policy of decreasing the rate of growth of the money supply gradually over an extended period of time, so that inflation can adjust with smaller unemployment cost. Contrast with cold-turkey policy.
Group Life Insurance
This is a very common form of life insurance which is found in employee benefit plans and bank mortgage insurance. In employee benefit plans the form of this insurance is usually one year renewable term insurance. The cost of this coverage is based on the average age of everyone in the group. Therefore a group of young people would have inexpensive rates and an older group would have more expensive rates.
A promise that a life insurance policy will be renewed without penalty or medical examination after the term has expired. The renewal rate can also be guaranteed.
An illustration is a computer-generated spreadsheet that takes into account a number of assumptions in order to show how a specific policy might perform for a specific individual.
This clause in regular life insurance policy provides for voiding the contract of insurance for up to two years from the date of issue of the coverage if the life insured has failed to disclose important information or if there has been a misrepresentation of a material fact which would have prevented the coverage from being issued in the first place. After the end of two years from issue, a misrepresentation of smoking habits or age can still void or change the policy.
In England in the 1700's it was popular to bet on the date of death of certain prominent public figures. Anyone could buy life insurance on another's life, even without their consent. Unfortunately, some died before it was their time, dispatched prematurely in order that the life insurance proceeds could be collected. In 1774, English Parliament passed a law which restricted the right to be a beneficiary on a life insurance contract to those who would suffer an economic loss when the life insured died. The law also provided that a person has an unlimited insurable interest in his own life. It is still a legal stipulation that an insurance contract is not valid unless insurable interest exists at the time the policy is issued. Life Insurance companies will not, however, issue unlimited amounts of coverage to an individual. The amount of life insurance which will be approved has to approximate the loss caused by the death of the individual and must not result in a windfall for the beneficiary.
This is the person covered by the life insurance policy. Upon this person's death, a tax free benefit will be paid to that person's estate or a named beneficiary.
Person whose life is protected under a specific policy.
Insured Retirement Plan
This is a recently coined phrase describing the concept of using Universal Life Insurance to tax shelter earnings which can be used to generate tax-free income in retirement. The concept has been described by some as "the most effective tax-neutralization strategy that exists in Canada today."
One of several investment accounts in which your premiums may be invested within your life insurance policy.
When an item is approved and released for sale, or when a policy or sales contract is accepted.
Age of an insured as at the policy issue date, using "age nearest" next birthday formula.
Date on which a policy is approved.
A policy of minimum government intervention in the operation of the economy.
This refers to the termination of an insurance policy due to the owner of the policy failing to pay the premium within the grace period [Usually within 30 days after the last regular premium was required and not paid]. It is possible to re-instate the coverage with the same premium and benefits intact but the life insured will have to qualify for this coverage all over again and bring up to date all unpaid premiums.
Termination when a policy has no cash value after all attempts at conservation have failed.
Policies which are sold but do not remain in force because the policyholder fails to pay premiums.
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